...

Community Property issues in Texas family law cases

Premarital and Marital Property Agreements are contracts between you and your spouse or spouse-to-be that can have a great deal of importance. A signed, written agreement between the two of you that allocates debts and property into either the community or separate property column will determine how each piece of property is treated if your marriage ends in a divorce. We hear about premarital agreements or “prenuptial” agreements in the media when wealthy, famous people get married. However, these sorts of agreements are not just for the uber-wealthy.

A premarital agreement will go into effect the day that your marriage begins. Most people that enter into these agreements do so to limit the amount of property or debt the community estate will accumulate throughout their marriage. On the other hand, if you and your spouse were to enter into a similar agreement during your marriage, it would be known as a marital property agreement. Essentially both documents are the same; it is just a matter of when the contract comes into being- before or after the marriage has started.

How a premarital or marital property agreement works in the context of a divorce is that whichever spouse files for the divorce will reference the property agreement within the Original Petition for Divorce. When it comes time for the final orders of your divorce to be filed after your case, a copy of the agreement will typically be attached to those orders as an exhibit for reference purposes.

How is community property divided in a divorce?

If you and your spouse have not entered into a premarital or marital property agreement, then it is the judge’s responsibility to divide your community property and debts. That is, the judge must divide the property if you and your spouse cannot agree to do so in mediation or an informal negotiation settlement conversation. Keep in mind that although Texas is a community property state, debt and property do not have to be divided 50/50 between you and your spouse. Factors like the size of each of your separate estates, fault in the breakup of the marriage as well as your income will weigh on a judge if they must divide your community estate.

In many cases, the community property that you and your spouse own cannot be divided straight down the middle. Let’s consider the most commonly divided large item of property that you and your spouse could have: the marital house. The easiest route that you and your spouse could go would be to sell the house and split up the equity that you would get after the mortgage and other costs of the sale are taken care of. There is a relatively little hassle in doing this, and it allows both you and your spouse to wipe your hands clean of this asset and move on.

However, that is all true when you take the sale of the house in a vacuum. Consider what could change if you and your spouse have a child together. In many cases, a judge will award the family house to whichever parent is named the primary caretaker of your child. It would have to be shown that this parent can afford the mortgage payments on their own. The reason a judge would order this would be to allow your child to have some degree of stability and consistency by remaining in the family home after the divorce concludes.

If you are the parent who is not awarded the right to be the primary caretaker of your child, then you may be wondering where this leaves you. Would a judge order you to leave the house, not award you primary responsibility for your child, and then not allow you to gain any monetary benefit from the house? The answer to that question is no.

A judge will often order that the house be sold as soon as your child turns 18, and the sale proceeds will be split between you and your ex-spouse at that time. Or, you may be able to exchange any equity in the house for another piece of property in the community estate that could equal the value. For example, if a classic car was purchased during the marriage that roughly equals your equity position in the home, that vehicle could be awarded to you.

Remember that while a judge will do their best to divide the community estate equitably, no judge is perfect. It is an impossible task to ask a judge to learn your family dyn